THE HISTORY OF TUNGSRAM 1896-1945 - MEK

TUNGSRAMTHE FLOATINGOF THE UNITED INCANDESCENT LAMPAND ELECTRICAL CO. LTD AND THE FINANCIALBACKING OF THE BANKSIn 1895 the capital resources of the public companyEgger B. & Co. already proved insufficient for maintainingand increasing the standard of production. Whenthe managing director, Gyula Egger described thecompany's financial problems to the director of the"Hungarian Commercial Bank" of Pest he also pointedout that "they could not respond to several businessproposals, exactly because they had to ensure that theabsolute mobility of their capital is preserved". (22)The Egger brothers understood that the only way toremain competitive in the electrical business was tohave sufficient working capital at their disposal, and tobe able to further invest continuously. For this reasonthey drew up an agreement with The HungarianCommercial Bank of Pest in July 1896 that they wouldmerge the Budapest and the Viennese factories of theFirst Austro-HungarianElectric Lighting and PowerTransmitting Factory to form a public company. Theydid not choose Commercial Bank by chance; they hadbeen using the services of the Commercial Bank inconnection with every financial transaction of thepublic company.It was always this bank which put up the necessary bailon behalf of Egger B. & Co. all the transport tenderstowards Postal and Telegraph Office and MAV (HungarianNational Railways). (23)The United Incandescent Lamp and Electric Co. Ltd.held its statutory meeting in the conference chamberof The Commercial Bank on 1 August, 1896. Egger B. &Co. contributed to the funds of the public companywith their Viennese and Budapest factories, buildings,machinery, goods, raw materials, debits and claims.The Electrical Incandescent Factory Ltd. retained itsindependence for the time being. For the above assets,estimated to be worth 600,000 Forints, the Eggerfamily received 6,000 shares in 100 Forint denominations.The total equity came to 1,400,000 Forints, and theCommercial Bank bought up 33 percent of the shares.They were syndicated by the Egger brothers and byCommercial Bank. The bank was represented by threedirectors on the board, and the Eggers delegated five.The new company was effectually controlled by theCommercial Bank, whose representatives had theright to veto any decision. The company was obligedto have all the planned investments costing more than10,000 Forints and all the business deals worth over60,000 Forints countersigned by the bank, whoseagreement was also needed for the employment ofany new executive with an annual salary over 6,000Forints.On the statutory meeting Jeno Szabo, member of theHungarian Upper House, Ferenc E. Vas, deputy directorof the Commercial Bank, Peter Maishirn, retiredrailway superintendent. Dr. Izidor Deutsch, lawyer,Bela Egger, David Egger, Gyula Egger and Jakab Eggerwere elected to the board of directors. (24)In accordance with the agreement drawn up with theCommercial Bank, the new public company decided torespect the five-year contracts signed with Bela Egger,